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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Exists at the point where the quantity supplied equals the quantity demanded






2. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






3. The difference between total revenue and total explicit costs






4. Models where firms agree to mutually improve their situation






5. Ed = 0 - no response to price change






6. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






7. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






8. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






9. The total quantity - or total output of a good produced at each quantity of labor employed






10. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






11. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






12. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






13. The lost net benefit to society caused by a movement away from the competitive market equilibrium






14. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






15. TR = P * Qd






16. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






17. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






18. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






19. Entry (or exit) of firms does not shift the cost curves of firms in the industry






20. AFC = TFC/Q






21. Es = (%dQs) / (%dPrice)






22. The mechanism for combining production resources - with existing technology - into finished goods and services






23. The change in quantity demanded resulting from a change in the price of one good relative to other goods






24. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






25. A good for which higher income decreases demand






26. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






27. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






28. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






29. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






30. Occurs when LRAC is constant over a variety of plant sizes






31. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






32. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






33. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






34. Exists if a producer can produce a good at lower opportunity cost than all other producers






35. The imbalance between limited productive resources and unlimited human wants






36. Ed = (%dQd)/(%dP). Ignore negative sign






37. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






38. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






39. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






40. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






41. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






42. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






43. 0 < Ei < 1






44. The additional benefit received from the consumption of the next unit of a good or service






45. Ed > 1 - meaning consumers are price sensitive






46. Costs that change with the level of output. If output is zero - so are TVCs.






47. The additional cost incurred from the consumption of the next unit of a good or a service






48. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






49. The most desirable alternative given up as the result of a decision






50. AVC = TVC/Q